Our editors have created them to help you find advice and information on the topics you care most about. Learn more.

Inc. Wire

Startup

Grow

Money

Growth Strategies

Lead

Innovate

Inc. Events & Offers

Inc. Partner Events & Offers

The Small Business Innovation Research Program

WRITE A COMMENT

IMAGE:

Advertisement

What is the Small Business Innovation Research program.? It is a federal program that requires federal agencies and departments to allocate part of their R&D budgets to small companies. Until enactment of the Small Business Innovation Development Act on July 22, 1982, only the National Science Foundation and the Defense Department had such programs. At least seven other bodies -- with extramural R&D budgets exceeding $100 million -- must also establish these programs. They are: the departments of Energy, Health and Human Services, Agriculture, and Transportation; the National Aeronautics and Space Administration; the Nuclear Regulatory Commission; and the Environmental Protection Agency. What kinds of companies participate in SBIR? Companies with 1 to 500 employees that have strong research or R&D capabilities in science and engineering are eligible. So far, most of the participating companies have been science or engineering-based high-technology businesses. Companies with 10 or fewer employees have won more than one-third of all awards. SBIR, however, is not an assistance program for small business. It is highly competitive, and only companies doing high quality R&D will win. To date, only one out of every eight proposals has been funded in Phase I; only one-third of these received Phase II grants. How does the program work? In Phase I, federal agencies issue a solicitation bulletin one or more times a year. Here they list problem areas or topics on which they would welcome proposals from small companies. Phase I gives grants of up to $50,000 for feasibility R&D. Only Phase I winners may submit Phase II proposals. These grants are designed for full-scale R&D; they are for one or two years and up to $500,000. In Phase III, companies can pursue any potential commercial applications either with private funding or through government production contracts. Phases I and II provide full allowable costs and a negotiated profit for the company. The program does not fund private commercial development. Why is this program unique? It is aimed at markedly improving the opportunities for small companies in federal R&D, while boosting the economy. The NSF program, which is intended to serve as a model, asks the proposer if the R&D has potential commercial applications and whether the small company intends to pursue these applications with private investment in Phase III. When proposals are judged about equal in technical quality, those that also have commercial potential will receive Phase I awards. Before applying for Phase II, the Phase I winners are asked to obtain a contingent commitment for private funding at least equal to the amount requested from the government for Phase II. How big is the program.? The new law will expand SBIR into the agencies that do 99% of all federal R&D. By 1987, assuming continued growth in federal R&D, the program should be funding more than half a billion dollars annually with small technology-based businesses. How many R&D projects will be funded annually? By the fifth year there should be about 3,000 SBIR projects funded annually, with 2,000 in Phase I and about 1,000 in Phase II. Who receives patent rights? Worldwide commercial rights to any patents normally will go to the small company. The government will retain rights for government use, and if the company makes no effort to commercialize the results, the government, in time, will retain still other rights. Are small nonprofit organizations eligible? No. The program is solely for small businesses. The program also requires that most of the R&D be carried out in the small business and that the principal scientist or engineer on the project be primarily employed by the small company at the time of the award. Where do the companies get the private funding commitments for Phase III? Usually from venture capital or manufacturing companies already in the field that are seeking investments or new products to license or buy. The commitment is not required, and outstanding proposals are funded anyway. Who is responsible for the government-wide program? The Small Business Administration has responsibilities for coordinating the new program. It is currently developing the regulations and a coordination plan under Donald Templeman, who heads the task force for implementing SBIR. The SBA will place your name on its mailing list. To receive SBIR information as soon as it becomes available, write to: Donald Templeman, Director, SBIR, U.S. Small Business Administration, 1441 L St. NW, Washington, DC 20416.